Another Krugman fallacy

As Congress returns to work this week with the repeal of last year’s health care overhaul on the House Republicans’ agenda, the national debate over this perennial issue has resumed.

Never one to let an opportunity to spread misconceptions and logical fallacies pass him by, New York Times columnist Paul Krugman trotted out his latest argument on the topic earlier this week.

Krugman, who has long been maligned by fellow economist Steven Landsburg for his use of the straw man fallacy, was true to form and added to his growing collection another textbook example of this error in reasoning.

In his column, Krugman focused on one fairly significant flaw in the GOP argument for repeal. He exposed the absurdity of Speaker John Boehner’s claim that the overhaul will increase the deficit when one counts the costs of related reforms of the health care system that were not actually included in last year’s bill.

He compares that sort of argument to the claim that a seemingly inexpensive dinner is actually very fiscally irresponsible when one takes into account already scheduled expenditures such as one’s monthly mortgage payment.

His point is that spending that will occur whether or not last year’s reforms are repealed should not be considered when determining the impact of said repeals on the deficit.

As far as it goes, Krugman’s argument is correct. Krugman’s broader implication, however, is not. This widely respected economist is attempting to create the impression that because one of the GOP’s favorite arguments for repeal is incorrect, repeal is a not a good idea.

Classic straw man, classic Krugman, no?

If Mr. Krugman were interested in an honest appraisal of the issue, he might consider the central claim Republicans are making, which is that the reforms will stifle job creation because of measures like the employer-provided insurance mandate and new taxes levied on insurance plans provided by small businesses.

That claim is backed up by the National Federation of Independent Business, a small business organization that, with the backing of 93 percent of its members, recently implored Congress to repeal the recent reforms and replace them with more market-oriented solutions.

Krugman might also consider a concern that, disappointingly, both major parties have almost completely ignored what the aforementioned Dr. Landsburg was talking about more than a year ago: The fact that it makes little sense to finance the vast majority of health care expenditures with insurance in the first place.

Another column would be necessary to fully explain this argument, but the basic idea is that financing even routine health care consumption through insurance insulates people from the true costs of their consumption, which leads to overconsumption and, by extension, higher than necessary prices.

Landsburg argues that a good first step on the way to lessening the centrality of insurance to our health care system would be to “eliminate the tax deduction for employer-supplied insurance.”

Doing so, he argues, would lessen overconsumption by those already insured and would have the added benefit of prompting people to do more shopping around instead of settling for the plan their employers provide.

Krugman has, of course, overlooked numerous other arguments for repeal, and I have left unmentioned a slew of potential solutions — offered by Republicans and others — that would do more to improve the provision of health care in this country.

But at least we’ve cleared one thing up: Mr. Krugman’s latest seemingly clever argument is, as usual, far from airtight.


E-mail: jarlower@indiana.edu